September 2026: ITC Infotech and Happiest Minds Announce Merger to Create an AI-First Technology Services Enterprise
ITC Infotech India Limited, a wholly owned subsidiary of tobacco-to-FMCG conglomerate ITC, and Happiest Minds Technologies Limited have signed definitive agreements to merge their operations in a transaction designed to create a scaled, AI-first global technology services enterprise targeting US$ 1 billion in annual revenue by FY28. The landmark deal provides parent company ITC Limited with a direct mechanism to address its long-standing conglomerate holding discount by establishing a standalone, publicly listed technology asset valued strictly on its own operational merits.
Under the agreed transaction structure, ITC Infotech will first acquire an aggregate 22.1% minority stake in Happiest Minds from the founder and affiliated promoter entities across two tranches for ₹1,330 crore (US$ 140 million). Following this acquisition, the merger will be executed via a share exchange where equity shareholders of Happiest Minds receive 25 shares of ITC Infotech for every 81 shares held. Upon completion, ITC Limited will serve as the promoter of the merged entity with a 73.4% controlling stake. The combined company will obtain a direct public listing on both the National Stock Exchange and Bombay Stock Exchange following customary regulatory, shareholder, and NCLT approvals, expected within 15 months.
| Metric | Combined Pro-Forma Profile |
| FY28 Revenue Target | US$ 1 Billion |
| Pro-Forma FY26 Revenue | ₹7,033 Crore (US$ 740 million) |
| Global Headcount | 19,000+ employees |
| Active Client Base | 800+ enterprise clients across 30+ countries |
| Geographic Footprint | North America (~38%), Europe (~31%), Rest of World (~31%) |
On a pro-forma basis, the merged entity enters the market with ₹7,033 crore (US$ 740 million) in FY26 revenue, a global workforce exceeding 19,000 professionals, and a combined client base of more than 800 enterprise customers across 30-plus countries. Its international revenue distribution is anchored primarily in North America (~38%) and Europe (~31%).
Operationally, the combination establishes an “AI First, Agile Always” platform by integrating Happiest Minds’ capabilities in artificial intelligence, Generative AI, digital engineering, cloud, data, and cybersecurity with ITC Infotech’s deep expertise in enterprise transformation, SAP, Product Lifecycle Management (PLM), and Industry 4.0 solutions. The consolidated scale allows the firm to capture larger multi-year global transformation contracts and drive cross-selling opportunities across key verticals including Consumer Packaged Goods, Hospitality, Manufacturing, BFSI, Healthcare, and EdTech.
July 2026: ITC Outlines Growth Roadmap and ₹20,000 Crore Capex Plan, Targets Top FMCG Position Amid Cigarette Tax Challenges
In recent corporate statements presented at its Annual General Meeting (AGM), ITC Limited outlined a strategic expansion plan aimed at securing the top position in India’s fast-moving consumer goods (FMCG) market. Bolstered by strong momentum over the past five years, ITC revealed that the company’s non-cigarette FMCG revenue expanded from approximately ₹14,720 crore in FY21 to cross ₹24,200 crore in FY26. This trajectory officially positions ITC as India’s second-largest FMCG entity by total revenue, behind Hindustan Unilever Limited (HUL) at ₹61,975 crore, and ahead of Nestlé India at ₹23,200 crore and Britannia Industries at ₹18,500 crore.
Anchored on this operational foundation, ITC expressed an explicit long-term aspiration to become India’s No. 1 FMCG player. Management projects the total addressable Indian FMCG market opportunity to reach ₹8 lakh crore (₹8 trillion) by 2035, driven by expanding digital infrastructure, quick-commerce proliferation, premiumisation, and shifting demand patterns among Gen Z and Gen Alpha demographics. Today, ITC’s FMCG portfolio comprises over 30 leading brands generating nearly ₹37,000 crore in annual consumer spending, reaching 280 million households nationwide and exporting products to over 70 countries. Over the five-year period, overall net segment revenue crossed ₹83,300 crore at a compound annual growth rate (CAGR) of 10.7%, while EBITDA grew at a 9.7% CAGR, bringing non-cigarette operations to nearly two-thirds of total segment revenue.
Addressing operational challenges in its core cigarette division, ITC detailed significant headwinds stemming from post-February 1 tax policy changes. The addition of excise duty and cess structures, combined with the highest 40% GST slab, resulted in price increases of ₹22 to ₹25 per pack of 10 sticks. ITC highlighted that high tax burdens have unintentionally driven the expansion of illicit, tax-evaded, and smuggled cigarette trade, impacting the legal sector. To mitigate these disruptions, ITC management announced a strategy involving calibrated pricing actions alongside a comprehensive re-architecting of its cigarette portfolio using targeted innovations and new SKUs. Despite fiscal headwinds, the cigarette segment delivered ₹37,100 crore in revenue for FY26 (a 13.7% increase), accounting for 45.9% of total group turnover.
To reinforce long-term operational scaling, ITC outlined a medium-term capital expenditure (capex) commitment of ₹20,000 crore targeted at high-multiplier areas. The capital allocation will focus on boosting manufacturing capacities, strengthening domestic supply networks, driving import substitution, and scaling export-oriented facilities. The proposed capex follows the recent commissioning of 8 production facilities, with another 6 projects currently in the pipeline. ITC’s existing manufacturing footprint spans over 300 facilities – including 45 company-owned plants – and collaborates with more than 9,500 SMEs. Nearly 90% of the firm’s total value creation occurs domestically, supported by 170 agri-processing and food factories connecting agricultural suppliers to market networks.
Foreign earnings remained a pivotal financial metric highlighted in corporate reports. Over the past 5 years, the ITC Group generated nearly $6.5 billion in cumulative foreign exchange earnings. ITC confirmed that this international revenue expansion was overwhelmingly driven by the Agri-Business segment, which contributed over 60% of total foreign exchange earnings through agri-exports. Furthermore, ongoing domestic manufacturing investments in pulp, decor paper, and capsule production under import substitution initiatives are projected to deliver foreign exchange savings exceeding ₹17,500 crore over the next decade.
June 2026: ITC Breaks the ₹300 Handle – Inside the Sell-Off and What It Takes to Find a Bottom
ITC shares have officially breached the crucial ₹300 support level, sliding down to around ₹280 – the stock’s lowest trading level since July 2022. For a company long regarded as a defensive safe haven and a reliable cash generator, this sharp descent has caught many investors off guard. What makes the sell-off so striking is that it stands in stark contrast to ITC’s underlying backward-looking numbers. The company wrapped up a stable FY26, marked by 15% revenue growth in non-cigarette FMCG, a 21% recovery bounce in its paper segment, and a steadfast commitment to its generous dividend payouts. However, the stock market doesn’t price past achievements; it prices future expectations. Investors are aggressively resetting their expectations for FY27, driven by a cluster of structural concerns.
The Drivers Behind the Slide
– The Cigarette Tax Shock: In February 2026, the industry was hit with an unprecedented increase in cigarette taxation. This has placed ITC in a classic corporate squeeze. If the company raises prices too sharply to cover the tax, it risks losing sales volume. If it absorbs the tax to keep consumers happy, its profit margins will take a direct hit. In this context, ITC preferred staggered price increases.
– The Rise of Illicit Trade: Tobacco demand rarely vanishes when taxes go up; instead, it frequently migrates. ITC faces a severe threat from illegal, untaxed cigarettes, which already command a massive chunk of the market. This widening price gap between legal and illicit-market products threatens legal industry volumes, a metric institutional investors track with an eagle eye.
– The Growth Divergence: While ITC’s revenue grew by a healthy 10.3% in FY26, its actual profit after tax (PAT) only crawled up by 4.9%. This gap between top-line expansion and bottom-line compounding naturally compresses the premium valuation multiples the market is willing to give the stock.
– The FMCG Scale Gap: True, ITC’s digital-first and organic brands are scaling beautifully, crossing a ₹1,350 crore annual revenue run rate. But when it comes to raw profit, cigarettes brought in over ₹21,051 crore in FY26 compared to FMCG’s ₹1,803 crore. FMCG simply isn’t profitable enough yet to shield the company’s overall bottom line from a tobacco slowdown.
Watch-outs for the Bottom
For the stock to stabilize and establish a firm bottom, the narrative needs to shift from fear of the unknown to quantifiable stability. Investors looking for a turnaround should ignore short-term noise and watch five critical operational markers over the coming quarters:
– Cigarette Volume Resilience: Look for evidence that consumers are accepting price hikes without a major drop-off in sales volume.
– Illicit Market Containment: Watch government enforcement metrics and company commentary to see if illegal trade is successfully being kept at bay.
– FMCG Margin Expansion: Check whether the 51% profit jump in non-cigarette FMCG can be sustained, proving that the business is turning into a genuine secondary earnings engine.
– Paper Segment Stability: Confirm that lower wood costs and reduced import pressures keep the paper recovery on track.
– FY27 Earnings Trajectory: Wait for overall profit growth to accelerate back in line with revenue growth.
The current drop to ₹280 signals that the market is heavily pricing in a worst-case scenario of slower growth and margin pressure. If ITC proves it can successfully navigate this tax shock without derailing its core volumes, this multi-year low may eventually be viewed as a classic long-term buying opportunity. Until those answers emerge, caution remains the dominant playbook.
May 2026: ITC Navigates Aggressive Excise Tax Hike and Rising Cost Pressures
ITC underlines that India’s cigarette sector is undergoing significant adjustment driven by excise-led pricing actions and structural tax concentration. The company notes that it has already implemented 50–60% of the required excise-tax-driven price increases, while the remaining adjustments are expected to be rolled out gradually over time. This staggered approach reflects ITC’s effort to ensure full tax pass-through without triggering a sharp disruption in volumes in a highly price-sensitive market.
ITC also points to deep structural characteristics within the sector, where approximately 10% of tobacco consumption accounts for nearly 80% of total tax revenues, underscoring a heavy dependence on a relatively small base of legal cigarette consumption for fiscal collections. At the same time, illicit trade is estimated to be roughly one-third the size of the legal cigarette industry, posing a continued challenge to both revenue stability and formal market growth.
In addition to tax and structural pressures in the core cigarette business, ITC faces sustained cost inflation across key input categories, including petrochemicals, packaging materials, and edible oils, which are relevant to its broader operations. These cost headwinds further complicate margin management at a time when pricing actions remain constrained by macroeconomic conditions.
May 2026: India Reopens Wheat Exports After Four-Year Ban; Limited Upside for ITC
India has resumed wheat exports in 2026 after a four-year restriction, creating a near-term opportunity for ITC Limited to re-engage in international grain trade. The company has already moved quickly, resuming shipments and emerging as one of the early exporters to capitalize on the policy shift. This underscores ITC’s established strength in agri sourcing, logistics, and export execution.
The export ban traces back to May 2022, when India abruptly halted wheat shipments following a surge in domestic prices triggered by a heatwave that damaged crops and tightened local supply. Between 2022 and 2024, exports were largely restricted, with only government-to-government deals or special approvals allowed to ensure domestic food security. Through 2024 and into 2025, improved harvests gradually rebuilt state reserves, allowing policymakers to consider reopening exports. With inventories replenished, the government permitted limited exports – reportedly up to around 5 million tons – marking the first meaningful reopening since the ban.
For ITC, this policy change offers incremental volume upside for its Agri Business division, but the broader commercial opportunity appears constrained. Indian wheat is currently priced at a premium in global markets, making it less competitive than supplies from regions such as the Black Sea or Australia once freight costs are included. As a result, demand is expected to be selective and short-term in nature, largely driven by buyers needing to bridge temporary supply gaps rather than secure long-term contracts.
This dynamic suggests that ITC’s export activity will likely remain opportunistic and deal-driven rather than sustained at scale. While the company can benefit from early shipments and trading margins, elevated domestic prices and limited global competitiveness reduce the likelihood of a strong, durable export cycle. In practice, ITC may continue to balance exports with domestic opportunities, particularly in higher-margin, value-added segments tied to its integrated FMCG and agri value chain. Overall, the reopening of wheat exports is a modest positive for ITC in the short term, but high prices and constrained demand mean it is unlikely to become a significant growth driver for the company’s Agri Business.
May 2026: ITC Leads Second Round of Cigarette Price Hikes as Tax Pass-Through Continues
India’s cigarette industry appears set for another round of price increases in May 2026, with ITC Ltd once again at the center of the adjustment cycle. Channel checks and distributor feedback indicate that ITC, alongside Godfrey Phillips India Ltd, is preparing to raise cigarette prices by roughly 17%, marking a second wave of hikes following the disruptive excise duty increase earlier this year.
The move is best understood as a continuation of ITC’s pricing response to the February 2026 tax shock. Earlier in the year, the Indian government implemented a sharp increase in excise duties on cigarettes, materially raising production costs across categories. Manufacturers responded with initial price hikes, but these appear to have only partially offset the margin impact, prompting a further round of increases now being contemplated for May.
From ITC’s perspective, the latest hike underscores the company’s well-established pricing power in a structurally concentrated market. With an estimated market share exceeding 70%, ITC has historically demonstrated an ability to pass through tax increases with a lag, balancing profitability against volume sensitivity. The planned increase – potentially lifting flagship products such as Gold Flake Premium meaningfully higher – suggests the company is prioritizing margin recovery after absorbing part of the earlier tax burden. However, the timing also reflects a more delicate demand environment. Industry data and distributor commentary point to volume pressure following the initial tax-led price increases, with consumers showing increased sensitivity to higher retail prices. In this context, ITC’s calibrated second round of hikes can be seen as a measured attempt to complete the pass-through cycle while avoiding a sharper demand disruption.
For Godfrey Phillips, the strategy appears broadly aligned. As a key premium-focused player, particularly through its association with international brands like Marlboro, the company has similarly relied on pricing to defend margins. The synchronized nature of the expected increases highlights the oligopolistic structure of the Indian cigarette market, where pricing actions by one major player are typically mirrored by others.
Equity markets have responded positively to the reports, with shares of both ITC and Godfrey Phillips rallying on expectations that pricing discipline will support earnings resilience despite regulatory headwinds. This reaction reinforces a broader investor view: while taxation remains a structural overhang, the industry’s ability to pass through costs remains largely intact.
Looking ahead, the key variable for ITC will be the elasticity of demand following successive price increases within a short period. While the company’s pricing power is well established, the cumulative impact of back-to-back hikes could test consumption patterns, particularly in lower price segments where downtrading or illicit alternatives become more relevant. In that sense, the May 2026 increase represents less a new development and more the final phase of a broader tax pass-through cycle – one that highlights both the resilience and the limits of ITC’s pricing-led business model.
January 2026: ITC Shares Fell 10% as the Government Levies New Tax on Cigarettes
Shares of Indian tobacco companies, ITC and Godfrey Phillips, slumped after the government imposed a new tax on cigarettes. ITC is the producer of Gold Flake and the market leader in India, while Godfrey Phillips is the distributor of Marlboro in the country. Trading at ₹365, ITC shares are at their lowest level since April 2023 and are on track for their worst day in six years (down 10%). Godfrey Phillips shares suffered the steepest fall since November 2016 (down 17%).
India’s Finance Ministry issued a new excise duty of ₹2,050–8,500 per 1,000 sticks (₹41–170 for a pack of 20), depending on cigarette length, effective February 1, 2026.
| Tariff item | Description of goods | Rate |
| 2401 | All goods | 18% |
| 2402 10 | All goods | 21% or ₹4,170 per thousand |
| 2402 20 10 | Other than filter cigarettes, of length not exceeding 65 millimetres | ₹2,050 per thousand |
| 2402 20 20 | Other than filter cigarettes, of length exceeding 65 millimetres but not exceeding 70 millimetres | ₹3,600 per thousand |
| 2402 20 30 | Filter cigarettes of length (including filter length, taken as 11 millimetres or actual length, whichever is more) not exceeding 65 millimetres | ₹2,100 per thousand |
| 2402 20 40 | Filter cigarettes of length (including filter length, taken as 11 millimetres or actual length, whichever is more) exceeding 65 millimetres but not exceeding 70 millimetres | ₹4,000 per thousand |
| 2402 20 50 | Filter cigarettes of length (including filter length, taken as 11 millimetres or actual length, whichever is more) exceeding 70 millimetres but not exceeding 75 millimetres | ₹5,400 per thousand |
| 2402 20 90 | Other | ₹8,500 per thousand |
| 2402 90 10 | Cigarettes of tobacco substitutes | ₹4,006 per thousand |
| 2402 90 20 | Cigarillos of tobacco substitutes | 12.5% or ₹4,006 per thousand, whichever is higher |
| 2402 90 90 | Other | 12.5% or ₹4,006 per thousand, whichever is higher |
The new duty revives the concerns on the resurgence of illicit trade which would put pressure on sales volumes in the legal market. While the Government has not specified the impact of the duty change on retail prices, the duty translates into a 22%-28% increase in overall costs for 75-85 mm cigarettes. Cigarettes longer than 75 mm account for c.16% of ITC’s volumes and are likely to see price increases of ₹2–3 per stick as a result of the levy. The new tax will apply in addition to the existing 40% Goods and Services Tax.
December 2025: ITC shares are down 13% in 2025
ITC share price has remained under pressure in 2025, weighed down by a mix of structural, sectoral, and stock-specific factors. Despite the successful completion of the ITC Hotels demerger, the stock has struggled to regain momentum, reflecting lingering investor caution, sector-wide weakness, and ongoing supply overhangs. ITC shares are down c.13% in 2025, sharply underperforming the Sensex, which has gained c.9% over the same period. Despite the under-performance in 2025, ITC shares have doubled over the past five years, underscoring its long-term wealth creation credentials.
The muted performance in 2025 can be attributed to four key drivers.
– British American Tobacco (BAT)’s continued reduction of its stake in ITC has remained a major overhang on the stock. BAT’s gradual and orderly sell-down has increased secondary market supply, capping upside rallies and keeping investor sentiment cautious. While the stake sale improves ITC’s long-term free float and ownership diversification, the near-term impact has been persistent selling pressure and limited re-rating potential.
– Uncertainty surrounding the Indian Government’s GST revision in late-2025 has weighed on ITC’s valuation. While cigarettes currently remain under the 40% GST slab, the review of GST rates has kept regulatory risk elevated. Market participants remain wary that cigarettes could face a higher effective tax burden through slab restructuring, cess adjustments, or changes in classification. This policy overhang has periodically resurfaced concerns around resurgence in illicit trade, legal market volume growth, pricing power, and earnings visibility in ITC’s core cigarette business, reinforcing investor caution of a disruptive tax increase.
– Broader weakness in the FMCG sector has weighed on ITC’s non-cigarette consumer businesses. The sector has faced margin pressures from higher input costs, muted rural demand, and an uneven recovery in discretionary consumption. As a result, investor preference has shifted toward faster-growing or more defensively positioned FMCG names, limiting enthusiasm for diversified conglomerates like ITC, despite steady execution and market share gains in several categories.
– The ITC Hotels post-demerger phase has introduced a period of valuation discovery and portfolio realignment. Investors continue to assess the standalone performance, capital structure, and growth trajectory of both ITC and the newly listed hotel entity. This adjustment phase has led to cautious positioning, as some investors have trimmed exposure or rebalanced holdings following the corporate action.
Operationally, ITC continues to benefit from its diversified business model. The cigarette segment provides stable and predictable cash flows, supporting investments across FMCG, paperboards & packaging, agribusiness, and other verticals. The paperboards and packaging business has faced pressure from imports and elevated input costs, but policy measures such as minimum import prices and anti-dumping duties have offered partial relief. Looking ahead, expectations of higher government spending, income tax relief, and a gradual consumption-led recovery could support demand across multiple segments over the medium term.
From a trading perspective, ITC shares are consolidating within a narrow range, suggesting a phase of digestion rather than a structural breakdown. Near-term support is seen around ₹400, with a stronger long-term base around ₹360-₹370. On the upside, resistance lies around the ₹420 zone, followed by ₹440–460 and the previous highs near ₹500. While near-term sentiment remains cautious amid global uncertainty and stock-specific headwinds, ITC’s strong balance sheet, diversified revenue streams, and steady cash generation continue to underpin its long-term relevance for Indian equity market investors.
December 2025: India Proposes New Tobacco Excise and Cess Regime
India is preparing a major overhaul of the taxation framework for tobacco products with the introduction of the Central Excise (Amendment) Bill, 2025, and the Health Security se National Security Cess Bill, 2025. The new regime is designed to replace the GST compensation cess with a dedicated excise-plus-cess structure for cigarettes, cigars, chewing tobacco, zarda, hookah tobacco and similar products. Under the proposal, cigarettes would face steep levies ranging from ₹2,700 to ₹11,000 per 1,000 sticks depending on length, including about ₹3,000 per 1,000 sticks up to 65 mm and ₹4,500 for the 65–70 mm segment. For cigars, cheroots, and chewing tobacco, the bills outline a cess of 25%. The legislation also introduces a fundamental shift for pan masala taxation by moving from an output-based system to a machine-capacity-based cess, requiring manufacturers to declare machinery used and pay a fixed levy aligned with installed capacity.
Compared with the current structure – where tobacco products are covered under the GST framework and subject to the compensation cess – the new system provides the central government greater flexibility to maintain high taxation levels once the GST compensation mechanism is phased out. The shift toward length-differentiated cigarette duties and capacity-based pan masala levies signals a more granular and administratively controlled approach. The regulatory intent is to secure revenue stability, tighten oversight, and align tax policy more closely with public health considerations, while reshaping cost structures for tobacco manufacturers across product categories.
September 2025: GST rate rationalisation is likely to provide a boost to ITC’s food division
The recent rationalisation of the Goods and Services Tax (GST) in India is set to provide a substantial uplift to ITC’s food division by making its nutrition‐oriented products more affordable to the general public. ITC previously committed to immediately transfer these benefits to consumers through price reductions across its product portfolio, effective from September 22, 2025.
ITC describes the GST reforms as forward‐looking measures that align well with ITC Foods’ strategic framework as ITC expands access to nutritious foods by lowering cost barriers. The GST Council has adopted a simplified two‐rate structure of 5% and 18%. These changes promise price reductions for many products and services as of the implementation date. During the transition period, consumers may observe a mixture of products bearing both old and new Maximum Retail Prices (MRPs).
A central pillar of the ITC’s strategy is to develop value-added nutritional products and ensure they are affordable for consumers. The company anticipates that the GST reforms will stimulate demand for key food items, especially ahead of the festival season. ITC’s food division encompasses a wide variety of products including biscuits, ghee and flavoured milk, among others. With the new tax rates in place, the company expects consumption of its core food portfolio to rise. In the last financial year (FY25), ITC’s revenue from fast-moving consumer goods (FMCG) operations approached ₹22,000 crore; while the revenue was up +5% year-on-year basis, its EBITDA margin shrank by 1.4pp to 9.8% after years of expansion.
August 2025: ITC shares are under pressure
ITC shares are flirting with the key ₹400 level as the Indian Government is reportedly considering additional excise and special duties beyond the proposed 40% GST (Goods & Services Tax) on tobacco products to sustain current tax collection levels.
The Indian Government is planning changes to the Goods and Services Tax (GST) system, called GST 2.0, which includes new taxes on tobacco products. They plan to add extra duties on top of a proposed 40% GST rate for tobacco to keep the total tax amount the same as it is now. Currently, tobacco products like cigarettes, cigars, and pan masala are taxed at 12% + 28% two-tier GST plus additional taxes – including compensation cess, central excise duty and national calamity contingent duty. The Government collects around ₹51,000 crore ($5.8 billion) yearly from tobacco GST, plus another ₹27,660 crore ($3.2 billion) from other taxes on manufacturers.
In Q1 2026, cigarette segment had 32.6% weight in ITC’s gross revenue and 83.9% weight in ITC’s operating profit. ITC is a diversified diversified company, but they make the money in cigarettes. An increased tax rate is likely to fuel the illicit market, putting pressure on ITC’s cigarette volume. In this context, a further downside (to ₹350-₹370) in ITC shares could be in the cards as the ₹400 support seems weakened.
June 2025: GQG raises stake in ITC to 5.47%
GQG Partners, a Fort Lauderdale, Florida, U.S. based investment firm led by Rajiv Jain, increased its stake in ITC by 0.51% from 4.96% to 5.47%. The move comes just days after British American Tobacco (BAT), ITC’s single largest shareholder, reduced its stake by 2.5% from 25.4% to 22.9%
April 2025: ITC announces two new acquisitions
ITC acquired 100% of the share capital of Sresta Natural Bioproducts Pvt. Ltd (SNBPL) which manufactures and sells organic packaged food products under the 24 Mantra Organic brand in the domestic and international markets. ITC will pay a total consideration of up to ₹472.50 crore ($55 million) on a cash-free, debt-free basis for the acquisition. SNBPL’s portfolio comprises over 100 organic products spanning branded grocery staples, spices and condiments, edible oils and beverages. The acquisition will strengthen ITC’s sourcing network and retail presence in the fast-growing, ₹10,000 crore ($1.2 billion) Indian organic products market.
Separately, ITC signed a definitive agreement to acquire the remaining 73.5% stake in Mother Sparsh Baby Care and make the D2C natural baby care brand its wholly-owned subsidiary. The acquisition will be completed over 2–3 years and the Mother Sparsh team will continue to operate the business during this period. ITC first invested in the company in 2021 by acquiring a 16% stake and later increased its stake to 26.5%. ITC’s total investment in Mother Sparsh will reach to ₹126 crore ($15 million).
Founded in February 2016, Mother Sparsh is an ayurvedic and natural baby and mother care brand, with an annual revenue run rate of over ₹110 crore ($13 million). The deal aligns with ITC’s strategy, which focuses on building a portfolio of consumer-centric, purpose-led brands, especially in high-growth and digital-first segments. Earlier, ITC acquired 100% stake in D2C meat delivery startup Meatigo’s parent to expand its product portfolio.
April 2025: ITC acquires a 44% stake in Ample Foods
ITC announced the acquisition of a 43.75% stake in Ample Foods for ₹1.31 billion ($15 million). The acquisition strengthens ITC’s position in the rapidly growing frozen, chilled, and ready-to-cook foods segment in India – estimated to be worth over ₹100 billion ($1.2 billion) in annual sales.
Ample Foods is the parent company of popular brands “Prasuma” and “Meatigo,” known for their ready-to-cook snacks and meals, sauces and condiments, raw and deli meat, local and international marinades, cheese, and frozen foods. Ample’s products are distributed through online and offline retail channels, as well as direct-to-consumer sales via brand websites.
March 2025: ITC acquires Century Pulp and Paper
ITC announced the acquisition of Century Pulp and Paper from Aditya Birla Real Estate for ₹35 billion ($410 million). The acquisition will add 480,000 metric tonnes per year of capacity to ITC’s paperboards and specialty papers business, which already produces over 1 million metric tonnes per year. All four ITC paper facilities are located in South India, while the Century paper factory is located in the North. In FY24, paperboards, paper and packaging segment contributed 12% of ITC’s ₹694.5 billion ($8.3 billion) overall revenue.
The transaction is expected to close in about six months, subject to regulatory approvals including clearance from the Competition Commission of India and the transfer of land leases.
February 2025: ITC is in talks to acquire MTR Foods and Eastern Condiments
ITC is in early discussions with Norway’s Orkla ASA to acquire its Indian subsidiaries, MTR Foods and Eastern Condiments for $1.4 billion. This move aims to strengthen ITC’s presence in the southern Indian spice and ready-to-cook food market and follows two earlier acquisitions: Sunrise Foods, a spices manufacturer, in 2020 and Prasuma, a brand specialising in frozen and ready-to-cook foods, in February 2025.
Orkla ASA is a Norwegian industrial investment company that entered the Indian market by acquiring MTR Foods in 2007 and later expanded its footprint by purchasing a majority stake in Eastern Condiments in 2020. In October 2023, Orkla restructured its Indian operations, consolidating MTR, Eastern, and its international business into a single entity named Orkla India. MTR Foods and Eastern Condiments have established strongholds in the ready-to-cook and spices segments, particularly in the southern states of Andhra Pradesh, Karnataka, Tamil Nadu, and Kerala. Orkla had contemplated an initial public offering (IPO) for its Indian business as recently as September 2024. However, the company is now evaluating whether a private sale could yield a more favourable valuation.
The Indian spice market, worth $8.4 billion in 2024, is projected to grow by 10% per annum through 2030.
February 2025: India is considering to raise GST on tobacco products to 40%
India is considering to raise Goods and Services Tax (GST) on cigarettes and other tobacco products to 40% and to add an additional excise duty after the GST compensation cess (i.e. the levies to compensate the states revenue shortfall due to the introduction of GST) ends in 2026. Currently, tobacco products bear a 28% GST plus other levies adding up to 53%, below the WHO’s recommended level of 75%. The GST Council will decide on the proposed changes.
Speculation on GST and excise duty increase took its toll on ITC shares which were already under pressure due to the subdued demand conditions in the overall consumption (FMCG) space, increasing input costs (leaf, wood etc.) and other circumstantial factors. ITC shares are now down to the key ₹400 level, trading at the same level as a year ago.
January 2025: ITC Hotels starts trading on NSE and BSE
ITC Hotels (ITCHL) started trading on the Indian stock exchange on January 29, 2025. ITCHL’s opening price of ₹180 per share was at a 30% discount to the indicative share price (₹260) set by the ITC (ex-Hotels) special pre-open trading session conducted on January 6, 2025. Selling pressure continued in the rest of the week with ITCHL trading as low as ₹155 before stabilizing around mid-₹160s.
Based on 1.25 billion shares outstanding, ITCHL’s most recent market cap is ~₹200billion (₹20,000 crore or US$2.3 billion) – which is on the low-end of the consensus established ahead of the special pre-open trading session. Based on the current valuation, BAT’s 15% direct stake in ITC Hotels is worth ~$345 million (~£280 million). BAT is expected to quickly divest its ITC Hotels stake and use the proceeds to extend the size of its own share repurchase program (SRP). For further details: Share Buybacks: BAT.
Expectation of BAT’s divestment is an overhang on the ITCHL shares in the near term, limiting the probability of a quick price recovery.
January 2025: ITC starts trading ex-Hotels
On January 6, 2025, a special pre-open trading session was conducted to derive the share price of ITC Hotels (ITCHL). As a result, ITC share price on NSE was adjusted by ₹26 or 5.4%, from January 3 close of ₹481.60, to settle at ₹Rs 455.60 for the market open. Considering that shareholders of ITC will be entitled to 1 equity share of ITCHL for every 10 equity shares of ITC they own, ITCHL’s indicative share price is settled as ₹260. This implies a ~₹325billion (₹32,500 crore or US$3.8 billion) valuation for the ITCHL which is well above the pre-trading consensus. Based on the revised valuation, BAT’s 15% direct stake in ITC Hotels will be worth ~$570 million (~£460 million). BAT is expected to quickly divest its ITC Hotels stake and use the proceeds to extend the size of its own share repurchase program (SRP). For further details: Share Buybacks: BAT.
The exact date of ITC Hotels listing on NSE and BSE are known yet, but shares should be listed within 60 days from the date of receipt of NCLT order (i.e. December 16, 2024).
December 2024: ITC Hotels demerger will come into effect from January 1, 2025
ITC announced that the demerger of ITC Hotels (ITCHL) will come into effect from January 1, 2025. All approvals for the demerger are now in place after the National Company Law Tribunal (NCLT), Kolkata Bench, approved the scheme of arrangement among ITC, ITC Hotels, their respective shareholders and creditors. The record date is set as January 6, 2025 for the purpose of determining the ITC shareholders eligible to receive equity shares of ITCHL. Shareholders of ITC will be entitled to 1 equity share of ITCHL for every 10 equity shares of ITC they own.
Launched in 1975 with the acquisition of a hotel in Chennai, ITC Hotels now operates 140 properties with 13,000 rooms under a portfolio of six distinct brands. ITC Hotels aims to expand its property portfolio to 200 hotels with 18,000 rooms in the next 4-5 years. As a standalone entity, ITC Hotels will have a debt-free balance sheet with an asset size of $1.3 billion.
According to the demerger scheme, ITC will retain 40% stake in ITC Hotels and the remaining 60% stake will be held directly by ITC’s shareholders. Following the demerger, British American Tobacco (BAT) will hold a 15% direct stake in ITC Hotels – which, as a standalone entity, could fetch $2.3-2.8 billion valuation (corresponding to a price-to-book ratio of around 2). Thereby, BAT’s direct stake in ITC Hotels will be worth ~$400 million (£315 million). BAT is expected to quickly divest its ITC Hotels stake and use the proceeds to extend the size of its £900 million share repurchase program (SRP) planned in 2025 (- which is financed by the ~3.5% ITC stake sold in March 2024). For further details: Share Buybacks: BAT.
